Light rail dies a sudden, painful and expensive death in Detroit

Rumors began to swirl in recent days that Detroit's Woodward light rail project was on the chopping block because of the hopeless fever swamp that is the city's financial situation.

Turns out, the scuttlebutt was true. It appears that federal funding and support will be shifted from the nine-mile, 19-stop rail line (between downtown and Eight Mile Road) to a plan for a system of buses that would operate in dedicated lanes.

Work on the rail project continued up until the 11th hour. As late as Monday, the Detroit City Council was interviewing candidates for its two seats on a seven-member oversight authority that would have acted as the construction manager for the rail line.

It emerged Tuesday night that Detroit Mayor Dave Bing, Gov. Rick Snyder and U.S. Secretary of Transportation Ray LaHood had reached some type of accord that kills the rail line in favor of buses -- a decision clearly linked directly to the city's looming takeover by a Snyder-appointed emergency financial manager.

Both Washington and the local private investment consortium that was ponying up $100 million of the plan's $528 million price tag had been critical of Detroit's plan to fund the system's capital cost via a Rube Goldberg-like concoction of bonds and grants.

Some of that money was to be siphoned from the city's already critically ailing bus service -- setting off alarm bells. There also was no real plan for operational funding.

It strained logic to imagine that the city could realistically turn to the bond market to finance the project while also facing take-over by a Snyder-appointed emergency financial manager and likely Chapter 9 bankruptcy.

After all, Detroit's finances are a nightmare: The city expects to run out of cash by April. By the end of the fiscal year in June 2012, the shortfall is estimated to be $45 million. The city has an accumulated deficit of about $180 million in its $1.2 billion general fund.

Other warning signs were there for all to see. There never was harmony among the project's stakeholders.

The private consortium that originally proposed a rail line for Woodward, M1 Rail, bickered with the city over the proposed alignment and layout of the project. Members of M1 preferred more of a curbside running system rather than the primarily median-running system developed by DDOT's hired designers.

M1 also was skeptical of the city's ability to manage and fund the line, and there were personality issues with the city's project manager, former DDOT chief and city CFO Norm White.

The grumbling resonated with Bing. He jettisoned former DDOT chief and city CFO Norm White as head of the rail project, and shifted it to the quasi-public Detroit Economic Growth Corp. (with city council blessing).

Bing had to listen because M1's major individual donors are deep-pocketed, powerful Detroit advocates with downtown business commitments: Penske Corp. founder Roger Penske, who is chairman of the project; Peter Karmanos Jr., founder of Detroit-based Compuware Corp.; Mike Ilitch,owner of the Detroit Tigers and Red Wings and co-founder of Little Caesar Enterprises Inc.; and Quicken Loans/Rock Financial founder Dan Gilbert, the project's co-chairman.

They have committed $3 million each for the display advertising rights to a station along the route. Henry Ford Hospital and Wayne State University also have committed $3 million each for a station.

About $20 million of M1's commitment is from the U.S. Department of Treasury's New Market Tax Credit program, which annually awards credits against federal income taxes for qualified organizations that invest in low-income communities.

The Troy-based Kresge Foundation has pledged $35 million toward the rail effort as part of M1 and actually has paid out about $14 million of that — and also publicly voiced displeasure with the city's handling of the project.

That's a lot of major names, and without M1's money, the rail line was dead.

Turns out, it's dead anyway.

A major general criticism of the project was that it stopped at Eight Mile and didn't run into the suburbs. The city said it couldn't pay for a line beyond its political limits, and the suburbs weren't offering up cash to extend it. Without making it easy for suburbanites to get to and from the railhead -- or have it end at a populated area -- many questioned whether enough people would regularly ride the line to justify its cost.

(For a detailed look at some of the project's key design and route elements, click here)

There's no public accounting yet of how much the city has spent on the Woodward project. San Francisco-based engineering firm URS Corp. was hired by DDOT to do the project's preliminary engineering and design. The city and its contractors leased space on the Cadillac Tower's 40th floor, and expected to take over the 39th, for the project design and engineering teams.

New York City-based engineering firm Parsons Brinckerhoff was hired to manage the environmental impact study for the city.

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